Too much weed among challenges in Washington state's legal cannabis industry
The legal cannabis industry is finding itself in a supply-side overload with more marijuana than can readily be sold. Prices have plummeted, which is good for people who use marijuana, but there are licensed growers who have scaled back or even shut down operations because they simply can’t stay profitable.
The Bellevue Chamber of Commerce hosted a luncheon on Thursday and invited a panel of industry experts to discuss the economic landscape of legal marijuana and some of the challenges that have arisen.
“Our state has some adjusting going on but it does that about every two to three years anyway," said Shannon Vetto, the CEO of Evergreen Market which is a cannabis retailer. "We are starting to become a little bit down on demand but we're seeing that following an unusual peak during the COVID time frame."
Joseph DuPuis is the co-founder and CEO of Doc & Yeti, a licensed grower/processor business in Tumwater and was also a panelist at the chamber luncheon.
“It's really taking a sophisticated operator to find the successes in a very challenging market,” DuPuis said. “The price compression that you are seeing out there would suggest there's still a glut of product."
That glut has forced many growers to produce less cannabis than they are legally allowed. Some have shut down their operations entirely.
“I have heard anecdotally that there have been literally dozens and dozens of licensed growers in the state of Washington that shut down in the last two to three years,” said Andy Brassington, a marijuana manufacturer with Evergreen Herbal which makes various cannabis-infused edibles and drinks. “What's happening is normal. It's painful. It's awkward for people who put their friends' and family's money in place, but it's the natural forces of economics."
Running a cannabis business already has its own built in challenges and operators say the unwillingness of the banking system to work with the industry is one of the biggest obstacles. Inflation has also driven up the price of many other consumer goods but the price of pot has headed in the opposite direction.
“Cannabis is one industry that did not benefit from inflation but they are a victim of inflation," DuPuis said.
Opening new markets for the available supply is seen as one solution but it is illegal to sell cannabis grown in Washington outside the state.
Lawmakers in Olympia are trying to help, and passed SB 5069 this session to allow the governor to authorize cross-state sales if the federal government ever lifts its own restrictions.
“So if there's a policy change at the federal government we'll be able to open up new markets and that’s good leadership,” Brassington said.
Still, cannabis has been a lucrative industry for those who can navigate the pitfalls. Marijuana generated $1.3 billion in retail sales statewide last year and contributed $527 million dollars in excise tax.
